TORONTO – Ontario’s financial watchdog says the province’s deficit will rise to $12.3 billion this fiscal year, half a billion more than he predicted before the spring election – but less than the Progressive Conservative government’s own projections.

Financial Accountability Officer Peter Weltman said Monday that policy decisions such as cancelling the cap-and-trade program and reversing several tax increases, combined with a weaker economic forecast, contributed to the change.

The government’s fall economic statement did not include a budget forecast beyond this year, which means it’s unclear if or when it plans to balance the books, much less how, he said.

Balancing the books in one mandate would require “significant changes” to policy that could have wide-ranging impacts on Ontario households and businesses, however, particularly since the government has committed to not raising taxes, Weltman added.

The province would need to limit the growth in program spending to 1.2 per cent per year, which the FAO said would represent the slowest growth in program spending over a four-year period since the mid-1990s.

“The province…needs to articulate a fiscal strategy,” Weltman said, adding Ontarians would benefit from an informed debate on the government’s budget objectives and “the trade-offs necessary to achieve them.”

In a statement released Monday, Finance Minister Vic Fedeli said the report shows the government inherited a structural deficit from its Liberal predecessors.

“The previous government recklessly spent taxpayer dollars and we must continue to work towards finding efficiencies in order to return to balance in a responsible, pragmatic way,” he said.

The minister did not, however, address any of the contents of the report, nor did he give any indication of the government’s path to balance.

The FAO report comes roughly six months after its previous economic analysis, which was issued just weeks before the provincial election.

At that time, the watchdog said the province’s deficit would jump to $11.8 billion in 2018 as a result of higher spending in the budget presented by the then-governing Liberals, as well as weak revenue gains.

The Liberals had projected a deficit of $6.7 billion, a figure that was also called into question by Ontario’s auditor general.

The Tories have since accepted the auditor general’s accounting but said a commission of inquiry and financial review convened to examine government spending found the province’s deficit will grow to $15 billion this year. They said this fall that various savings measures had brought that number down to $14.5 billion.

The FAO said the government’s number includes reserve funds and relies on a more pessimistic assessment of tax revenues.

The watchdog also said $1.4 billion in ministry underspending that was factored into the spring budget was excluded from the Tories’ deficit calculations but later counted as part of the savings achieved by the new government. Program spending was reduced by $1.7 billion compared with the spring budget, but the province also cut $2.1 billion in revenues, the FAO said.

Opposition legislators accused the government of inflating the deficit to justify sweeping cuts to services, and of not living up to its own calls for transparency.

“(Premier) Doug Ford is manufacturing a crisis to justify deep, deep cuts to the things we need and deserve, like health care, repairs to our children’s schools and social services,” said NDP legislator Sandy Shaw.

Liberal legislator Mitzi Hunter said the findings raise questions about how grim the province’s finances will be if the government follows through on some of its other campaign promises, which could further drive down revenues.

Green party Leader Mike Schreiner said the government must lay out its financial plan for the province.

“Magic money and fairy dust, it seems to be the plan,” he said. “That’s what happens when you write your platform on the back of a napkin and you don’t have a fiscally costed plan.”

The FAO said its projections do not include any election promises that the government has yet to act on or announce.